IDEAS home Printed from https://ideas.repec.org/a/eee/lauspo/v87y2019ics0264837718319872.html
   My bibliography  Save this article

Financial returns from collaborative investment models of Eucalyptus agroforestry plantations in Lao PDR

Author

Listed:
  • Phimmavong, Somvang
  • Maraseni, Tek Narayan
  • Keenan, Rodney J.
  • Cockfield, Geoff

Abstract

Global demand for forest products is increasing and plantation forests are supplying a growing proportion of wood to industry. Plantation expansion has however slowed and the location and management of plantations to meet future timber needs is uncertain. In South East Asia, population pressure and land tenure arrangements will challenge broad scale plantation establishment. Companies and government are looking to plantation models that integrate local community or conservation needs but there has been little financial analysis of integrated production systems that can inform investment decisions by corporations or smallholder tree growers. Lao PDR has at least four million hectares of degraded forest land that could potentially be used for production and conservation purposes. The Lao 2020 Forestry Strategy aims to increase forest cover across the country, particularly on degraded lands, to enhance rural livelihoods and natural capital. This includes the most recent target of 1.2 million ha. The strategy envisaged that, in part, forest cover would be increased through the establishment of commercial tree plantations by local farmers, and by domestic and foreign investors, to provide wood exports and domestic timber products. Realising this target has been challenging. Foreign investors have been allocated concessions but have not been able to achieve area targets due to community resistance. There is a need to explore timber production investment models that engage local growers and address community needs for food, but there has been little analysis of these integrated approaches. This paper presents financial analyses of three plantation models: a ‘collaborative investment model’ with Eucalyptus intercropped with rice by landholders for the first year of the rotation, Eucalyptus intercropped with cassava by the forestry company, and a Eucalyptus monoculture. Results indicated that all models were highly profitable with positive NPV under a 12% interest rate, and Internal Rates of Return (IRR) ranging from 17% to 20%. The Eucalyptus-rice model generated the highest returns, with 21% of the NPV going to the local rice farmer. Eucalyptus monoculture was more profitable than when intercropped with cassava. Results are compared with those from other plantations in the region. Adoption of timber plantation models that integrate local food production can avoid potential conflicts over land allocation for plantations, build local engagement and support enhanced food security. The implications for forest and land use policy in Lao PDR are discussed.

Suggested Citation

  • Phimmavong, Somvang & Maraseni, Tek Narayan & Keenan, Rodney J. & Cockfield, Geoff, 2019. "Financial returns from collaborative investment models of Eucalyptus agroforestry plantations in Lao PDR," Land Use Policy, Elsevier, vol. 87(C).
  • Handle: RePEc:eee:lauspo:v:87:y:2019:i:c:s0264837718319872
    DOI: 10.1016/j.landusepol.2019.104060
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264837718319872
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.landusepol.2019.104060?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Maraseni, Tek Narayan & Phimmavong, Somvang & Keenan, Rodney J. & Vongkhamsao, Vongvilay & Cockfield, Geoff & Smith, Hilary, 2018. "Financial returns for different actors in a teak timber value chain in Paklay District, Lao PDR," Land Use Policy, Elsevier, vol. 75(C), pages 145-154.
    2. Martinelli, Gabrielli do Carmo & Schlindwein, Madalena Maria & Padovan, Milton Parron & Gimenes, Régio Marcio Toesca, 2019. "Decreasing uncertainties and reversing paradigms on the economic performance of agroforestry systems in Brazil," Land Use Policy, Elsevier, vol. 80(C), pages 274-286.
    3. Derek Byerlee, 2014. "The Fall and Rise Again of Plantations in Tropical Asia: History Repeated?," Land, MDPI, vol. 3(3), pages 1-24, June.
    4. Maraseni, Tek Narayan & Son, Hoang Lien & Cockfield, Geoff & Duy, Hung Vu & Nghia, Tran Dai, 2017. "Comparing the financial returns from acacia plantations with different plantation densities and rotation ages in Vietnam," Forest Policy and Economics, Elsevier, vol. 83(C), pages 80-87.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sgarbossa, Jaqueline & Elli, Elvis Felipe & Schwerz, Felipe & Nardini, Claiton & de Cristo, Edinéia & de Oliveira, Davi & Caron, Braulio Otomar, 2020. "Morphology, growth and yield of black oats cultivated in agroforestry systems in southern Brazil," Agricultural Systems, Elsevier, vol. 184(C).
    2. Cary, Michael A. & Frey, Gregory E., 2020. "Alley cropping as an alternative under changing climate and risk scenarios: A Monte-Carlo simulation approach," Agricultural Systems, Elsevier, vol. 185(C).
    3. Phimmavong, Somvang & Keenan, Rodney J., 2020. "Forest plantation development, poverty, and inequality in Laos: A dynamic CGE microsimulation analysis," Forest Policy and Economics, Elsevier, vol. 111(C).
    4. Tabah Arif Rahmani & Dodik Ridho Nurrochmat & Mi Sun Park & Rizaldi Boer & Meti Ekayani & Arif Satria, 2022. "Reconciling Conflict of Interest in the Management of Forest Restoration Ecosystem: A Strategy to Incorporate Different Interests of Stakeholders in the Utilization of the Harapan Rainforest, Jambi, I," Sustainability, MDPI, vol. 14(21), pages 1-16, October.
    5. Vongdalone Vongsikeo & William S. Breffle & Jenny L. Apriesnig & Brian D. Barkdoll, 2020. "The Economic Value of Carbon Sequestration through Tree Planting in Laos," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(2), pages 102-111, June.
    6. Carias, Dora & Page, Tony & Smith, Hilary & Race, Digby & Keenan, Rodney J. & Palmer, Graeme & Baynes, Jack, 2022. "Beyond the ‘Field of Dreams’ model in smallholder forestry: Building viable timber value chains for smallholder tree growers in developing countries," Land Use Policy, Elsevier, vol. 120(C).
    7. Alice Fitch & Rebecca L. Rowe & Niall P. McNamara & Cahyo Prayogo & Rizky Maulana Ishaq & Rizki Dwi Prasetyo & Zak Mitchell & Simon Oakley & Laurence Jones, 2022. "The Coffee Compromise: Is Agricultural Expansion into Tree Plantations a Sustainable Option?," Sustainability, MDPI, vol. 14(5), pages 1-17, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cubbage, Frederick & Kanieski, Bruno & Rubilar, Rafael & Bussoni, Adriana & Olmos, Virginia Morales & Balmelli, Gustavo & Donagh, Patricio Mac & Lord, Roger & Hernández, Carmelo & Zhang, Pu & Huang, J, 2020. "Global timber investments, 2005 to 2017," Forest Policy and Economics, Elsevier, vol. 112(C).
    2. Tham, La Thi & Darr, Dietrich & Pretzsch, Jürgen, 2021. "Analysis of Acacia hybrid timber value chains: A case study of woodchip and furniture production in central Vietnam," Forest Policy and Economics, Elsevier, vol. 125(C).
    3. Carias, Dora & Page, Tony & Smith, Hilary & Race, Digby & Keenan, Rodney J. & Palmer, Graeme & Baynes, Jack, 2022. "Beyond the ‘Field of Dreams’ model in smallholder forestry: Building viable timber value chains for smallholder tree growers in developing countries," Land Use Policy, Elsevier, vol. 120(C).
    4. Naylor, Rosamond & Fang, Safari & Fanzo, Jessica, 2023. "A global view of aquaculture policy," Food Policy, Elsevier, vol. 116(C).
    5. Phimmavong, Somvang & Keenan, Rodney J., 2020. "Forest plantation development, poverty, and inequality in Laos: A dynamic CGE microsimulation analysis," Forest Policy and Economics, Elsevier, vol. 111(C).
    6. Vongdalone Vongsikeo & William S. Breffle & Jenny L. Apriesnig & Brian D. Barkdoll, 2020. "The Economic Value of Carbon Sequestration through Tree Planting in Laos," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(2), pages 102-111, June.
    7. Nguyen, Hanh Tien & Ariyawardana, Anoma & Ratnasiri, Shyama, 2020. "Forest plantation owners' willingness to pay for hybrid nursery stock: The case of Acacia hybrids in Central Vietnam," Forest Policy and Economics, Elsevier, vol. 116(C).
    8. Nanhthavong, Vong & Bieri, Sabin & Nguyen, Anh-Thu & Hett, Cornelia & Epprecht, Michael, 2022. "Proletarianization and gateways to precarization in the context of land-based investments for agricultural commercialization in Lao PDR," World Development, Elsevier, vol. 155(C).
    9. Pontes, Laíse da Silveira & Porfírio-da-Silva, Vanderley & Moletta, José Luiz & Telles, Tiago Santos, 2021. "Long-term profitability of crop-livestock systems, with and without trees," Agricultural Systems, Elsevier, vol. 192(C).
    10. Alice Fitch & Rebecca L. Rowe & Niall P. McNamara & Cahyo Prayogo & Rizky Maulana Ishaq & Rizki Dwi Prasetyo & Zak Mitchell & Simon Oakley & Laurence Jones, 2022. "The Coffee Compromise: Is Agricultural Expansion into Tree Plantations a Sustainable Option?," Sustainability, MDPI, vol. 14(5), pages 1-17, March.
    11. Keijiro Otsuka, 2021. "Strategy for Transforming Indonesian Agriculture," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 57(3), pages 321-341, September.
    12. Prokop, Paweł, 2018. "Tea plantations as a driving force of long-term land use and population changes in the Eastern Himalayan piedmont," Land Use Policy, Elsevier, vol. 77(C), pages 51-62.
    13. Martin Rudbeck Jepsen & Matilda Palm & Thilde Bech Bruun, 2019. "What Awaits Myanmar’s Uplands Farmers? Lessons Learned from Mainland Southeast Asia," Land, MDPI, vol. 8(2), pages 1-23, February.
    14. Waldén, Pirjetta & Eronen, Mari & Kaseva, Janne & Negash, Mesele & Kahiluoto, Helena, 2024. "Determinants of the economy in multistrata agroforestry in Ethiopia," Land Use Policy, Elsevier, vol. 141(C).
    15. Claudia de Brito Quadros Gonçalves & Madalena Maria Schlindwein & Gabrielli do Carmo Martinelli, 2021. "Agroforestry Systems: A Systematic Review Focusing on Traditional Indigenous Practices, Food and Nutrition Security, Economic Viability, and the Role of Women," Sustainability, MDPI, vol. 13(20), pages 1-20, October.
    16. Maryudi, Ahmad & Nawir, Ani A. & Permadi, Dwiko B. & Purwanto, Ris H. & Pratiwi, Dian & Syofi'i, Ahmad & Sumardamto, Purnomo, 2015. "Complex regulatory frameworks governing private smallholder tree plantations in Gunungkidul District, Indonesia," Forest Policy and Economics, Elsevier, vol. 59(C), pages 1-6.
    17. Junquera, Victoria & Meyfroidt, Patrick & Sun, Zhanli & Latthachack, Phokham & Grêt-Regamey, Adrienne, 2020. "From global drivers to local land-use change: Understanding the northern Laos rubber boom," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 109, pages 103-115.
    18. Murakami, Lia Yukari K. & Massi, Klécia Gili & Mendes, Tatiana Sussel G., 2023. "Socioeconomic aspects of riparian vegetation debt in the state of Sao Paulo, Brasil," Land Use Policy, Elsevier, vol. 130(C).
    19. Charlton, Ryan A. & Naghizadeh, Zahra & Ham, Cori & Wessels, C. Brand, 2020. "A value chain comparison of Pinus patula sawlog management regimes based on different initial planting densities and effect on wood quality," Forest Policy and Economics, Elsevier, vol. 111(C).
    20. Debonne, Niels & van Vliet, Jasper & Ramkat, Rose & Snelder, Denyse & Verburg, Peter, 2021. "Farm scale as a driver of agricultural development in the Kenyan Rift Valley," Agricultural Systems, Elsevier, vol. 186(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:lauspo:v:87:y:2019:i:c:s0264837718319872. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joice Jiang (email available below). General contact details of provider: https://www.journals.elsevier.com/land-use-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.